An Aug. 7 ballot proposal will give Dearborn residents the chance to decide if they’d like to pay for the remaining portion of a massive sewer project through a designated property tax or face an increase in their water bills.

The city said online that the combined sewage overflow project — a federally mandated project aimed at reducing pollution in the Rouge River — has had more than $300 million in work either completed or under way since voters approved a designated tax in 2004 but requires another $60 million for additional construction projects to comply with a permit issued by the Michigan Department of Environmental Quality.

Flood waters surround the sewage retention basin in on Military Street in Dearborn.(Photo: Maryann Struman)

The initiative, which includes more than 40 cities, has updated Dearborn’s sewers, water mains, and neighborhood roads, according to the city.

Combined sewers, according to the Friends of the Rouge website, collect storm water and sanitary waste water in the same sewer and do not have "enough capacity to carry all of the storm water to the treatment plant" in the event of heavy rains or large snow melts. The group says the solution is to either separate the sewer lines or build more retention basins to hold water during storms.

Dearborn will use both methods — separation and retention — to address the overflows.

Jim Murray, Dearborn's director of public works, said the city is separating parts of the sewer system and using four retention basins to capture and treat overflows before they before go into the river. The existing capture-and-treat facilities are located on Military Street near Michigan Avenue, Outer Drive near Michigan, Prospect Street near Schaefer Road, and the Detroit Public Works site on Greenfield Road. One more facility is planned for the area of Rotunda Drive and Southfield Road.

Murray said the city has until 2025 to complete the project per the MDEQ permit but he expects to finish by 2023.

"The river is tremendously better off," Murray said. "For the first time, the lower part of the river, south of Michigan Avenue, is meeting water quality standards for oxygen. ... We've (previously) had fish kills couple dozen times a summer because the oxygen level in the river would fall down to zero and the fish couldn't survive."

Cost to taxpayers

To cover the remaining fixes, the city estimates an average designated property tax of .87 mills. The city says residents can expect to start with a rate of .22 mills and that rates shouldn't reach higher than 1.12 mills.

Jennifer Ryan, a staff accountant with the city, said they anticipate to issue the $60 million through a $20 million bond in December and a $40 million bond in December 2020. The different millage rates were based on the anticipated debt service payment — or the principal and interest on the bond — and the expected taxable value for the city, she said.

The tax would appear on bills in the winter.

If voters approve the property tax increase, the estimated annual cost over the life of the bonds will be $48 for a homeowner with the average taxable value of about $55,000. Taxable value is about one-half of market value.

That's on top of the $233 that the average taxpayer is already are paying for the project through an existing millage, which Ryan said now stands at 4.25 mills and will be going down over time. The last debt service payment is in 2042 or 2043.

The Free Press reported in 2004 that the average proposed rate for the existing millage was 3.27 mills.

Ryan said the millage is expected to stay on the books until 2045, when the debt is finally paid off.

Homeowners can use an online calculator on the city's website to compare the costs of the CSO millage and water rates for their home.

Property tax or water hike?

If the proposal is rejected and water rates increase, the city said a typical water user can expect an average increase of $68 per year. Because voter approval is not necessary to increase water rates, voters will only see the property tax proposal on the ballot, the city said.

For residents with homes above the city's average taxable value, it's likely that the water bill route is the best option.

For instance, a $200,000 home has a taxable value of $100,000, which means that that homeowner will be paying an extra $87 on the new millage versus the $68-per-year average increase on the water bill.

Dearborn Councilman David Bazzy says he's backing the millage because some taxpayers can write it off on their annual income taxes and because the water bill option will disproportionately impact lower-income residents.

"So what happens is, you get (with the water option) the people that are, you know, three or four kids living in a house with a family in a bungalow, they disproportionately are going to pay for the CSO project versus people that live in very expensive homes," Bazzy said.

Jacklin Zeidan, 54, says that even though the millage wouldn't impact her family financially, she still plans to vote against the proposal based on the principle that they've already passed a millage for the project and are coming back to "ask us for more."

"At the end of the day for me, right now, I am at this point where I'm voting 'no' to everything. ... Where are we holding them accountable?" said Zeidan, who previously ran in the Democratic primary for the 15th District of the Michigan House of Representatives.

Bazzy says they city doesn't have a choice because the project is part of a federal mandate.

"It isn't like we can say, 'Look, we already spent $300 million' — to the federal government — 'we got as far as we could, the rest of the sewage is still gonna run into the Rouge River;" Bazzy said. "That's not an option."

Rick Petrucha, treasurer and tax expert at the Michigan Tax & Accounting Professionals, is not a Dearborn resident but said he would opt for the millage in the hope of getting some sort of deduction.

He acknowledged, however, that it will be more difficult with the new tax laws, which raise the standard deductions to $12,000 for single individuals and $24,000 for married couples and cap deductions at $10,000.

"The only other thing they can do is start cutting social services and things of that nature— you know, parks and recs and all of that kind of stuff — to help pay for it," Petrucha said.